New York (HedgeCo.Net) – A group of six hedge funds led by Ritchie Capital Management are suing J.P. Morgan, Bank of America, Wells Fargo, UBS, Merrill Lynch and 7 other entities. The hedge funds claim that the banks “aided and abetted Thomas Petters’ $3.7 billion Ponzi scheme.” Courthouse News reports.
Petters was convicted for turning his hedge fund, Petters Group Worldwide into a $3.65 billion Ponzi scheme and received a 50 year federal sentence.
The group of hedge funds claim they lost $177 million in the scheme. They put two dozen major banks on notice in a summons.
“Among other things, J.P. Morgan Chase Bank N.A. entered into a ‘Blocked Accounts’ agreement with J.P. Morgan Europe Limited and Polaroid Consumer Electronics Europe B.V., an entity created by Petters to perpetuate his criminal activity, which established highly suspicious accounts in London that Petters used to illegally launder money,” the plaintiffs say in the notice. “Allowing defendants to retain the funds would constitute an unjust enrichment,” they say.
The six hedge funds listed as plaintiffs–Ritchie Capital Management LLC, Ritchie Special Credit Investments Ltd., Ritchie Capital Structure Arbitrage Trading Ltd., Ritchie Capital Management Ltd., Rhone Holdings II Ltd., and Yorkville Investment I LLC–claim that the financial institutions conspired with Petters in the criminal actions. The complaint cites that Chase allowed Petters to established “highly suspicious accounts in London that Petters used to illegally launder money.”
The plaintiffs want the $177 million back, plus interest, and court costs, and damages for fraud, conspiracy, negligence and unjust enrichment.
In 2010, Ritchie Capital Management filed a petition for a Writ of Certiorari, asking the U.S. Supreme Court to review decisions of the Minnesota Federal District Court and Eighth Circuit Court of Appeals denying restitution to the victims of Thomas Petters’ $3.5 billion hedge fund Ponzi scheme.
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